The document provides an overview of the Contract Labour (Regulation and Abolition) Act of 1970. It aims to regulate the employment of contract labour in certain establishments and provide for its abolition in certain circumstances. Key points include definitions of terms like contractor and contract labour; requirements for employers and contractors to register establishments and obtain licenses; responsibilities of employers and contractors regarding wages, welfare, and other labour laws; and guidelines on when contract labour would be considered for abolition. The act evolved over time in response to various labour inquiries and committees to better prevent the exploitation of contract workers.

2. CONTENTS:
• Objective
• Evolution
• Definitions
• Advisory Board
• Applicability of the Act
• Registration
• Contractor Management
• Licensing
• Responsibilities of Employer & Contractor
• Applicability of other Laws on Contract Labour Act
• Labour Act : New Perspectives
• General Information (Risks, Amendments)
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3. OBJECTIVE:
• To regulate the employment of contract labour in
certain establishments and to provide for its abolition
in certain circumstances.
• It is to prevent exploitation of the contract labour and
also to introduce better conditions of work.
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4. EVOLUTION
1859
• Workman’s Breach of Contract Act, 1859
1860
• Whitley Commission
• Abolition of Contract Labour by implication.
1938
• Bombay Textile Labour
• Enquiry Commission is formed.
1941
• The Bihar Labour Enquiry Committee
1946
• The Rega Committee
• Labour Investigation Committee was formed
1960
• Standard Vaccum Refinery Issue
• Second Five Year Plan, Tripartite Committes was formed
1970
• CONTRACT LABOUR ACT
• 5th Sep. 1970 – Assented by the President
Came into effect from 10th Feb, 1971
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5. DEFINITIONS
• Abolition - Automatic absorption of Contract Labour.
• Regulation - Managing or Monitoring the Labour force
• Contract Labour - The labour of workers whose freedom is
restricted by the terms of a contractual relation and by laws
that make such arrangements permissible and enforceable.
Should not do any main activity of the Company.
– Off the Role/Indirect Employee.
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6. • Establishment -
– Any office or department of Government or local authority
– Any place where any industry, trade, business, occupation
is carried on.
• Principal Employer -
– In a factory, the owner or occupier of the factory.
– In relation to any office or department of the Government
the head of that office or department.
DEFINITIONS Contd.,
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7. • Contractor –
– Intermediary between Labour and Employer.
– A person who undertakes to produce the given result
for the establishment through contract labour.
– A person who supplies contract labour(min of 20 No’s)
for any work of establishment and may include a sub
contractor within this category.
DEFINITIONS Contd.,
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8. APPLICABILITY OF THE ACT
Employer
Contract
or
Contract
Labour
EMPLOYER
CONTRACTOR
It applies to every employer and
to every contractor who
employees 20 or more number of
workmen on any day of the
preceding twelve months as
contract labour.
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9. ADVISORY BOARD
The Central Board (Sec. 3) consists of
– A Chairman appointed by Central Government
– The Chief Labour Commissioner
– Members not exceeding 17 and not less than 11.
Similarly with the State Board (Sec. 4)
– A Chairman appointed by State Government
– The Labour Commissioner
– Members not exceeding 11 and not less than 9.
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10. REGISTRATION OF ESTABLISHMENT
(Sec. 7)
Every establishment which proposes to engage contract
workers for its work is required to obtain a certificate of
registration from the appropriate Government.
• Procedure:
Employer should approach the Registering office with
– Application for registration in triplicate in Form No.I
to the registering officer (Sec. 6).
– Receipt showing payment of the prescribed fee.
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11. • If the application for registration is complete in all respects,
the registering officer shall register the establishment and
issue a registration certificate in Form-II
• Every certificate of registration shall contain the following
– The name and address of the establishment
– The maximum number of workmen to be employed as
contract labour in the establishment
– The type of business
– Relevant other particulars
Contd.,
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12. ADMINISTRATION OF CONTRACTOR
• Documents that are to be produced by the contractor to
employer for approval are
– Copy of the document showing legal status of the firm.
– Copy of the document showing allotment of PF Code No.
– Copy of receipt / cover note / insurance policy obtained.
– Copy of chalans showing remittance of security deposit
– License fee to obtain the labour license.
Contractors should in an application Form for engaging
contract labour every month /new entry.
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13. LICENSING OF CONTRACTORS
(Sec.11-15)
• Every contractor who has 20 or more workers on any day
of the month has to get a license for engaging contract
labour for the work of any establishment.
• License is issued by the authorized licensing officer
(Section-12).
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14. GRANT OF LICENCES (Sec. 13):
• Procedure:
The Contractor has to approach the Licensing Authority
(Sec. 11) along with
– An application for the grant of a license in triplicate in
Form No.IV
– Security Amount that has to be deposited (Rs.20/ Employ).
– Receipt showing the fee paid to the licensing officer.
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15. GRANT OF LICENCES Contd.,
– Certificate by the principle employer in Form-V stating
that the applicant is employed by him as contractor in
relation to its establishment.
The licensing officer, after making necessary investigations
will grant a license in Form VI which can be renewed from
time to time.
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16. RENEWAL OF LICENCE
• Procedure for Renewal of License:
– Contractor should approach the Licensing authority before
30 days of expiry date of license along with
• An application for the renewal of license in Form VII in
triplicate
• Required fee that is to be remitted.
If the renewal application is not submitted by prescribed date
then the contractor will have to pay a fee of 25% in excess of
the fee ordinary Payable.
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17. REGISTRATION Vs LICENSING
PARAMETERS REGISTERING LICENSING
AUTHORITY Taken by the Principle
Employer (Sec 7)
Taken by the Contractor (Sec 12)
ISSUED When Certain fees is paid
through Demand Draft
When Fees is paid along with the
Security Amount Deposition
VALIDITY ONCE TAKEN IS ENOUGH ONE YEAR
RENEWABILITY Not Needed Has to Renew Every Year before
Due Date
DISPLAY Need not be displayed in the
office
Should be displayed at the place
of the contract work is
performed
Pre-Requisities Form I for registration in
triplicate copy along with
prescribed fees.
form IV for license in triplicate
copy along with license &
security fees
form V, given by Principal
employer to contractor
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18. RESPONSIBILITIES OF THE
EMPLOYER
• To get the registration of the Establishment.
• To engage workmen only through licensed contractors.
• To display the notice showing Name & Address of the Inspector
(In English & Local Language), rate of wages, date of payment.
• To recover the expenses involved from the contractor through bills
payable.
• The principal employer has to nominate a representative to be
present at the time of disbursement of wages to the contract
workers.
– It shall be the duty of such representative to certify the amount
paid as wages in the wage-register.
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19. Contd.,
• To report the information relating to contract labour when the
inspector asks for.
• To maintain a register of Contractors (Form XII).
– Number of Contractors
– Nature of Work performed
• To send Annual Return (Form XXV) to licensing authority by 15th
Feb.
• To submit returns for each contractor within 15 days of start or
completion of work (Form VI A).
• To provide welfare and Health facilities, if the contract is not
providing (Sec. 16-20).
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20. CONTRACT Vs REGULAR LABOUR
PARAMETERS CONTRACT LABOUR REGULAR LABOUR
Part time/ finite time Full Time
Relationship Has an Intermediary i.e.,
Contractor
Directly connected to the
Organization
Work Performs the Supplement job Performs the main activity
of the organization
Responsible/ Reporting To the Contractor To the employer
Supervision By the Contractor By the Employer
Facilities Provided by the Contractor Provided by the Employer
Payment Type Time Based/ Piece Rated Regular Pay
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21. RESPONSIBILITIES OF THE
CONTRACTOR
• To get approval from the Employer.
• To obtain License from the Licensing Authority.
• To submit monthly printed bill to the Company for
payment of the work done by him 1st day of following
month.
• To display the Name of the Inspector, Wages paid &
Abstract of the Act (In English and Local Language)
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22. Contd.,
• To maintain Muster roll, Wages, Deductions, Overtime,
Fines, Advance, Wage slips Registers(Sec. 29).
• To provide Welfare and Health facilities:
– Canteens (Sec. 16)
• If labour is above 100 No’s
– Rest Rooms (Sec. 17)
– Drinking Water, Urinals, Latrines (Sec. 18)
• Urinals – 1 for 50 Workers
• Latrines – 1 for 25 Workers
– First Aid (Sec. 19)
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23. Contd.,
• To be responsible for payment of wages before 7th of each
month(Sec. 21).
• To disburse the wages in the presence of the representative
of employer.
• To issue Employment Cards to all the workers by 3 days of
start of work.
• To send half early return in form xxiv after 30 days from
close of half year i.e. June and December.
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24. APPLICABILITY OF OTHER LABOUR
LAWS UPON CONTRACT LABOUR
• The Employees’ PF & Misc. Act, 1952
• The ESI Act,1948
• The factories Act,1948
• The Industrial Disputes Act,1947
• The Minimum Wages Act,1948
• The Payment of Wages Act, 1948
• The Payment of Bonus Act,1965
• The Payment of Gratuity Act, 1972
• The Workman’s Compensation Act, 1923
• Equal Remuneration Act, 1976
• Child Labour Act, 1986
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25. LATEST AMENDMENTS
• The Contract Labour (Regulation and Abolition),
(Amendment) Act, 1986.
• The Delegated legislations provisions (Amendment)
Act,2004.
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26. CONTRACT LABOUR: NEW
PERSPECTIVES
• Any worker should not be kept continuously as a causal
or temporary worker against a permanent job for more
than 2 years unless he is employed on a contract for a
specified period.
• Licensed Contractors should be treated as a separate
establishment in case of liability.
• Issuing smart cards to workers.
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27. Contd.,
• Contract workers are to be paid 20% above the fixed
minimum wages at entry level.
• Payment of additional 4.81% contribution as gratuity to
be paid by industry in addition to EPF and ESI
contributions.
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28. GENERAL INFORMATION
• Contract Labour, doing the work of perennial nature for
years together, in the absence of genuine contract between
company and contractors, they become entitled to be
regularized in employment.
• On prohibition of the contract labour, preference should
be given to the erstwhile contract labour for employment
as and when vacancy arises in their respective operational
areas.
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29. GENERAL INFORMATION
• The contract labour who performs similar kind of work as
regular workmen, will be entitled to the same wages and
service conditions as regular workmen as per the Contract
Labour (Regulation and Abolition) Central Rules, 1971
(Section 21).
• The license of Contractor is liable to be cancelled if he
does not pay same wages to his employees as paid to
direct employees.
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30. GUIDELINES
• The guidelines are mandatory in nature and are:
– Conditions of work and benefits provided to the contract
labour.
– Whether the work is of a perennial nature.
– Whether the work is incidental or necessary for the work of
an establishment.
– Whether the work is sufficient to employ a considerable
number of whole-time workmen.
– Whether the work is being done ordinarily through regular
workman in that establishment or a similar establishment.
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31. GRIEVANCE PROCEDURE
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32. RISKS
• Risks involved in engaging the contract labour are:
– It should not be a sham arrangement.
– Economically viable.
– No direct Supervision should be done.
– Should not be at the cost of keeping own labour idle.
– Jobs requiring high skills and not possessed by our
own employees can be vendored out
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33. PROCESS FLOW
•Head of Department/Manager/Owner.
•Should have the registration certificate
EMPLOYER
•A person who is responsible to supply the labour to the organization
•Acts as an Intermediary between Organization and Contract Labour
•Should have a license.
•Should get an approval from the employer.
•Employer shall pay the expenses for the labour.
CONTRACTOR
•Indirect employees;
•persons who are hired, supervised and remunerated by a
contractor who, in turn is compensated by the establishment.
•Off the Roll Employees
CONTRACT
LABOUR
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34. REFERENCES
• Labour and Industrial Laws, II Edition, Author: P.K.Padhi
• http://www.ficci.com/spdocument/20189/Industrial-
Relations-and-Contract-Labour-in-India.pdf
• http://labourbureau.nic.in/CL_WC_Pet_Ref.pdf
• http://clc.gov.in/Acts/shtm/cla.php
• http://labour.gov.in/upload/uploadfiles/files/ActsandRules
/Service_and_Employment/TheContractLabour1970.pdf
• http://pblabour.gov.in/pdf/acts_rules/contract_labour_regu
lation_and_abolition_act_1970.pdf
• http://www.nacib.in/pdf/Labour%20Act.pdf
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